Business France, France’s national agency supporting economic development and foreign investment, recently launched Creative France, a campaign spotlighting French business innovation and creativity. Its opening event in east London's Shoreditch in late February hosted a number of French start-ups and SMEs in fields ranging from gastronomy and fashion to entertainment, technology and science. The idea behind the campaign, says France’s ambassador to the UK, Sylvie Bermann, is to showcase why French businesses are good for the UK and highlight the range of sectors in which French entrepreneurs exhibit notable creativity.
“Generally when you think of France, you think of luxury goods and gastronomy,” the ambassador said during the event. “But we are more creative than that, and our companies here are very successful for instance in hi-tech goods, be it in nuclear plants, transport equipment, and other goods and equipment in the UK. We need to explain that to the public.”
The centre of Europe
Asked about the opportunities France offers to UK businesses, the ambassador replied citing the 2000 British businesses already in France as testament to its attractiveness. “We have R&D credit, which is one of the best in the world, one of the highest productivity levels in the world, and we are in the centre of Europe so we have connections with the Middle East and Africa. It is a very dynamic country.”
The chief executive of Business France, Muriel Pénicaud, went on to detail France’s FDI situation. “One of the reasons for this campaign is that we suffer from an image that doesn’t fit reality,” she said. “People may think that British investors shy away from France – the reality is that 9% of FDI in France is from the UK and in 2014 that figure increased by 50% compared with the previous year.”
Greenfield investments monitor fDi Markets lists Britain as France’s third biggest investor after the US and Germany, recording 218 greenfield projects between 2010 and 2015.
“In fact when people look at real figures, the productivity, the tax credit, the R&D, the package for innovation, availability of engineers, the ability to export from France to all Europe, the Middle East and Africa, they see that the market is a driver for innovation,” added Ms Pénicaud.
Smaller, boutique start-ups were featured at the event – young companies such as skincare maker Romy Paris, DJ turntable app Edjing, and household technology innovations such as Sensorwake. Multinationals involved in the campaign include Airbus and Deezer, “which bear testimony to the innovative strength and creativity of the French business community”, said the campaign’s website.
Business France’s priority sectors for attracting FDI are R&D, manufacturing and headquarters projects, according to Ms Pénicaud. “Nine percent of our foreign investment is in R&D and it increased by 40% last year. We have a lot of human talent – 80,000 engineers and 70,000 PhDs every year, but we also have the best package for credit tax for research. In manufacturing, we are already the first in Europe and we want to remain first in attracting manufacturing FDI.
“And professionals in a wide range of domains choose to have their headquarters here – in aeronautics, automotive, medtech, biotech and more,” said Ms Pénicaud. “We are looking for investors in all of these domains and looking to increase the number of investors every year.” France was ranked by EY’s attractiveness survey as the third most attractive destination to establish company operations in Europe following Germany and the UK.
Investment analysts note France’s corporate tax rates – among the highest in the world – significant labour costs and complexity of tax and labour regimes as some of its main barriers to foreign investment. In the past decade the country's FDI has suffered – foreign investment into the country’s economy was less than $5bn in 2013 from an average of $84bn a year between 2005 and 2007, according to Unctad figures.
In an effort to revive investment to counter Europe’s financial crisis, the French government has implemented a €20bn corporate tax credit programme and eliminated a corporate social solidarity tax. It has also created a research tax credit and tax incentives for innovative new companies, according to Santander Trade.
“The challenge is to convince the world that the past of reform will continue,” emphasised Ms Pénicaud. “There will be a new bill on social flexibility in a few months; we need to focus on economic flexibility while at same time maintaining a model that takes care of the security of the people.”
Faced with the possibility of the UK leaving the EU following the June 2016 referendum, both the chief executive of Business France and the French ambassador expressed their concerns about the vote. “I think the largest part of the economic ecosystem – banks, investment funds, companies – hopes that Brexit will not happen, from both sides of the channel,” Ms Pénicaud told fDi Magazine.
“We are following Brexit very closely,” commented Ms Bermann. “It will have consequences if it happens. I hope it won’t because I think everyone would lose – the UK, France and the EU, so we really hope the UK will stay in the EU.”